Uneven Data Keeps Major Indexes Range Bound; Will QE-3 Happen In September?

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

US stocks remained near flat Wednesday while the blue-chip stocks closed slightly lower as investors weighed mixed economic data amid diminished hopes for further monetary expansion measures from the US Fed.

The Dow Jones closed lower while the S&P 500 and the NASDAQ Composite managed to hang on to marginal gains even though volumes continue to remain weak.

The dollar tracked higher, pushing the euro to its lowest level since July 30 as improved US economic data trimmed chances of further quantitative easing by the Fed. The dollar index, a measure of the greenback’s strength against a basket of six leading currencies, continued to march ahead, trading at 82.649 against Tuesday’s 82.540 after a Federal Reserve report showed industrial production grew at a faster-than-anticipated rate of 0.6 percent in July.

The big question remains as to whether there will be more QE in September. For a straight forward opinion, please tune in to the Fed’s Richard Fisher’s frank interview on CNBC:

Meanwhile in Europe, Spanish Prime Minister Mariano Rajoy kept the concern over euro’s future alive by announcing an extension of the government’s long-term unemployment benefits. With this move, Rajoy effectively stepped a few steps back on his budget deficit reduction pledge, according to analysts.

European stocks wavered, losing ground Wednesday after mining firms suffered heavy losses and mixed US economic data lowered chances of further assets purchase by the Federal Reserve.

On a flat trading day in the US, energy ETFs gained, especially the alternative energy funds. The United States Oil Fund (USO) edged up 0.77 percent amid media reports US oil inventory has declined sharply amid the flare up in the Middle East.

The Global X Uranium ETF (URA) soared 4.94 percent, emerging among the day’s biggest gainers. However, investors should note the fund has lost 10.55 percent, year to date. The United States Natural Gas (UNG) on the other hand tumbled 2.38 percent after natural gas prices eased as temperatures across the country started to cool.

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